Dmitry Kaminskiy, managing trustee of the Biogerontology Research Foundation, participated in a panel discussion entitled “Investing in an Ageing Population” at The Economist’s Ageing Societies conference on the 29th of November, 2016. The other panelists included Johan Utterman of Lombard Odier Asset Management (one of the largest Swiss banks) and Jean-Marc Pont of Generali Investments (the investment arm of the third-largest insurance company in the world). The Economist has organized a companion conference, The Business of Longevity, that took place December 7th in San Francisco.

Key points addressed by Dmitry Kaminskiy included:

To future-proof your investment portfolio in an aging world, you should invest in healthcare. Specifically in the life sciences and regenerative medicine, which is a paradigm shift from the current medical model of treating symptoms toward actual cures that address the molecular and cellular causes of aging and disease.

During the last decade, regenerative medicine has progressed substantially, thanks largely to progress in genetics. A new clinical paradigm has also emerged into so called P3 Medicine – personalized, preventive, precision medicine.

More disruptive breakthroughs have come about due to advances in deep learning, a specific method at the forefront of artificial intelligence.

And now AI have started to be heavily applied to precision medicine and will bring outstanding results in the next few years.

From the beginning, our investment fund Deep Knowledge Ventures was focused on AI, but primarily on the intersection of AI and healthcare.

We started to invest in this niche 3 years ago, and now one of our portfolio companies, Insilico Medicine, achieved the leading position at the intersection of AI, Longevity, and precision medicine.

But there are also many other upcoming technologies which are already close to clinical practice. Gene therapies, novel stem cell technologies, and senolytics are only a few of them.

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The science is way ahead of the biopharma business model

Thanks to AI, the Law of Accelerating Returns remains true, where the rate and annual dynamic of technical innovation is increasing every year. For example, the next 5 years of innovation will be equivalent to the last 15.

We need to think in the long-term and focus on impact, not merely short-term profits. A long-term strategy does not mean delayed profits for decades, of course. It merely means that progressive investors must have a clear vision of the strategy. We must take into account that the rate of progress will continue to accelerate in upcoming years.

Consider Google, which had 17 search engine competitors at the time of its founding. Instead of competing in marketing, which was impossible at that time, Google instead focused on improving technology. And within just 4 years, Google became one of the biggest internet companies.

It will come as no surprise that Google will also become the biggest anti-aging and longevity company via their companies Calico and Verily. Meanwhile, because geroscience is so complex, a brute-force approach based on unlimited financing is unlikely to yield results. That’s why we need more initiatives, both large and small.

But this new longevity industry will be so big that there will be enough room for many many Googles there. It will be the most impactful industry in modern history. It is clear that the first investors which will choose the right strategy will earn the greatest returns as this new industry emerges. And we have evidence now that we are in the start of an investment boom in the longevity industry.

Risky, unsafe, and overhyped companies must be neutralized before they harm the reputation of the industry

Some big biotech failures have already slowed down progress in biomedicine for decades. It happened previously with gene therapies and stem cells. The problem is that the anti-aging longevity industry will always attract charlatans and this could harm the entire industry and credible scientists. That’s why it is in the interest of progressive science community and innovative businesses to create an effective framework for investment relations and safe evaluation of promising startups and technologies.

The efficiency of scientific translation is currently bottlenecked by the VC financing process. There is a finite number of firms and dollars. In 2015, the US venture capital industry invested $58.8B in all the companies which drive the economy forward. With less than half going to biotech. The same year, Americans spent $59.9B on beer, $63B on hairdressers, and $88.4B on gambling, according to the US Bureau of Economic Analysis. We need to rethink the current funding model.

Inefficiency in VC and academia is considerable. Fraud also damages the investment climate. Theranos is a biotech company that offered a “revolutionary” platform to perform blood tests on a single droplet of blood. Theranos even has such figures as Henry Kissinger on the board of advisors. The science was not properly evaluated, the hype was deafening, and the company reached over $9B valuation. Then it all came crashing down.

We need a win-win situation where scientists and business people collaborate to identify the most promising regenerative medicine companies. Deep Knowledge Life Sciences has been at the forefront of longevity investing and we are establishing a vanguard of experts who will protect against repeats of Theranos by publically assessing business plans and scientific publications on a digital desentralized platform.

It is an undisputed fact that biological aging is the primary risk factor for the most serious non-communicable diseases like heart disease, stroke, cancer, diabetes, et cetera. Instead of targeting these diseases individually, we can slow down or even reverse the motor or root cause of these diseases: aging itself. Indeed, healthy lifespan has been extended in mice by 30% -- and that’s only one of several distinct lines of research than could synergize going forward.

Biopharma business-as-usual is flawed, and focusing on individual manifestations of aging is unwise now that scientists can rejuvenate animals and reduce disease risk for multiple age-related diseases.

In that era, major progress was made treating particular acute conditions such as heart disease and cancer. However, prevention was largely neglected. Although the science has leapfrogged forward, the business model of big players is frozen in the previous century.

Progress in the biotech industry is mostly driven by venture capital, biotech and pharma R&D. But big pharma exists in an environment where, on a global scale, there is little incentive to develop preventative therapies. They simply do not currently have a reasonable business model for developing preventative therapies, and are more comfortable moving forward into the future using the framework and business model of reactive treatment that dominated the previous century. If the shift from reactionary toward preventative treatment is left solely in the hands of conservative, traditional VC, biotech and pharma players, it could take decades to foster the much-needed paradigm shift from reactionary to preventative medicine.

An obvious gap: the science is 20 years ahead of investors.

Regenerative medicine companies focused on prevention, longevity and treating aging itself will create a multi-trillion dollar industry within the decade– the Longevity industry.

I doubt that many of today’s big players will remain leaders in this new industry, which will disrupt the current biotech and healthcare industry, and today’s big companies will be “Uberized” by new, more sophisticated newcomers. Some of incumbents will survive if they quickly adopt these new companies and technologies.

This dynamic is similar to the financial sector, where some old banks will remain leaders because they were able to disrupt themselves and transform into a kind of Fintech companies. But most of the traditional banks will fail, for they are unable to quickly implement new information technologies (IT) -- particularly AI -- into the core of their business.

Examples of recent breakthroughs include:

Google Calico: Some of the most famous geroscientists, like Cynthia Kenyon, are on the team. The company is led by CEO Arthur Levinson, former CEO of Genentech. Drugs are already in development for neurodegeneration in partnership with Abbvie.

Saudi + Softbank form a$25B to $100B technology fund, more deep tech government funds are necessary.

The UK is excellently positioned to become a hub of advanced regenerative medicine

Precision, personalized, and preventive (P3) medicine is poised to facilitate a paradigm shift from treatment to prevention by leveraging genomic analysis, gene and cell therapy, advanced diagnostics, imaging, and artificial intelligence. The UK has an excellent opportunity to foster the development of the true maturity and coming of age of the regenerative medicine industry and the P3 medicine industry,, much in the way that the Isle of Man is currently being used as a testbed for Fintech, which was initially in a legal gray area beyond formal restrictions. Proof of concept in such jurisdictions opens the door for development and regulatory reform in more regulatorily-conservative nations like the UK.

The UK has all the necessary resources to become a leader in regenerative medicine, and I am hopeful that policymakers and the business community fully recognize this biotech opportunity and also understand the calamitous socioeconomic risks of inaction.

Disruption in Venture Capital and the Emerging Longevity Industry

The venture capital industry is inefficient and will be disrupted. Decentralized venture investing platforms for sophisticated limited partners are coalescing and we are now supporting the development of such next-generation platform based on blockchain technology to enable and streamline the investment process for life sciences.

The Aging Analytics Agency is going to launch a beta version of this platform in 3-4 months.

And for a better understanding of the landscape of this new industry we are supporting the creation of a Longevity Industry Landscape report which will be produced by Aging Analytics Agency in coordination with the Biogerontology Research Foundation, which will be openly published in collaboration with a number of scientists in January.